Selection into Credit Markets: Evidence from Agriculture in Mali.

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 25.03.2014, 12:15 - 13:30


Presentation by 

Lori Beaman (Northwestern University)


Capital constraints may limit farmers’ ability to invest in agriculture. We partnered with a MFI who offered agricultural loans in randomly selected villages. In villages not offered loans, we gave cash grants to randomly selected households. In these villages, investments in agricultural inputs and ultimately profits increase. Credit constraints are therefore binding. In villages not offered loans, we gave grants to a random subset of farmers who (endogenously) did not take out loans. We find lower – and in fact zero – returns in agriculture among this set of farmers. Agricultural lending can deliver funds to farmers with high returns to capital.

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